'Crazy bad': Time for China to admit it has an environmental crisis

Kate Galbraith

Buried in this month's China headlines -- about the gas pipeline deal with Russia, the US Department of Justice's indictment of Chinese military hackers, and saber rattling with Vietnam -- was this juicy morsel: Petco and PetSmart will soon stop selling dog and cat treats made in China. Big Pet does not want your puppies getting sick from contaminated jerky. Thousands of reported pet illnesses have not been definitively linked to the Chinese-made munchies, but it hardly matters: The "Made in China" label has become toxic. Over the years, tainted milk, pork and infant formula have made people jittery.

This is emblematic of a much larger problem: China's environmental crises are starting to drive foreign companies and expats away, along with their money and talent. Pollution numbers are piling up, and they're scarier all the time. Nearly one-fifth of farmland is polluted, an official government study found in April, and so is three-fifths of China's groundwater. No wonder the tea in my cupboard isn't branded as "Grown in China" or that a Chinese food giant just bought a big stake in Israel's largest food producer, which specialises in dairy goods -- in part because Chinese consumers are looking for safer cheese products, a Shanghai analyst told the Financial Times.

For residents, the most obvious concern is the air: In smog-swamped Beijing, just 25 of 2,028 days between April 2008 and March 2014 had "good" air quality by US standards, according to a Wall Street Journal analysis of US embassy air-monitoring data. Don't worry: China still is a great place to bring your family -- just as long as nobody eats, drinks or breathes. I'll always remember the way a top Texas energy regulator, Barry Smitherman, recounted a 2010 trip to Beijing, which happened to include the day the US Embassy infamously described the air quality as "crazy bad." "I came away from the trip concluding that I'm not really afraid of the Chinese as a competitor," he told me.

Beijing is among the most polluted cities on the planet. Photo: Getty Images

Of course, business in China has hardly ground to a stop because of environmental concerns. Quite the opposite: Depending how you measure it, China's economy could overtake the United States this year, and Beijing still expects its GDP to grow by 7.5 per cent in 2014. Many international workers still want a stint in China, both for the experience and because they can often make more money than at home.

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But the casualties are mounting. An obvious one is tourists, who are recalibrating whether the wonders of the Great Wall are worth clogged lungs. The number of visitors to Beijing fell by 10 per cent in the first 11 months of 2013 compared to the same period in 2012 (other factors like the strengthening yuan were also at work). Edward Wong, The New York Times correspondent in Beijing, has written memorably about how many Chinese and foreigners, fearful for their air, food and water, feel as though they are "living in the Chinese equivalent of the Chernobyl or Fukushima nuclear disaster areas." After checking his own air filter the first time, Wong wrote, "the layer of dust was as thick as moss on a forest floor. It nauseated me."

It's no surprise, then, that some people are leaving -- mostly expats and wealthy or well-educated Chinese who are able to find well-paying jobs internationally. Solid numbers are hard to come by, but a recent survey by the Beijing-based Center for China and Globalisation found that nearly 70 per cent of Chinese leaving the country cited pollution as a key factor. (Many may not be leaving permanently, and pollution is not the only factor in their calculus -- distaste of corruption, search for adventure, fear of arrest and desire for a better education for their children are some of the other reasons why people leave China.) But permanent emigrants will invest their assets elsewhere, to the government's undoubted dismay. China's one-child policy may contribute to the rush, says Daniel Gardner, a professor of history at Smith College, since couples with only one son or daughter are especially reluctant to risk their child's health in a polluted environment. As for foreigners, a recent survey by the Beijing and Northeast China chapters of the American Chamber of Commerce found that 48 per cent of respondents "cited difficulty recruiting or retaining senior executives in China due to pollution," reports Bloomberg.

Life among the chimneys. Photo: Reuters

Foreigners who stay may be making more money than ever because of the pollution, however. Panasonic recently started offering extra pollution pay for expatriates in China. The move will be mirrored by other major international companies, but it may not be enough. The Canadian Embassy in Beijing is having problems filling slots because of pollution concerns, for example, even though staff already receives a hardship allowance similar to those doled out in Bogota or Caracas, according to Canada's Globe and Mail. In April, the Canadian ambassador to China hinted to the paper that one day, small children could be barred from accompanying parents to China.

Beyond individuals' physical and mental health, the pollution fiasco matters because China wants to transition its cities to modern, service-oriented economies filled with software entrepreneurs, health experts and international financiers. "Under the old plan, where China's get-rich plan was based on dirty manufacturing," environmental concerns didn't matter, says Matthew Kahn, a professor at UCLA's Institute of the Environment and Sustainability. Now, China wants to send manufacturing inland and lure Davos and Silicon Valley types to its big coastal cities. But such people have choices, says Kahn, and Beijing's allures of cuisine and culture, universities and government, will matter far less if people are afraid for themselves and their children. Even Shanghai, thought to be cleaner than Beijing, suffered its own Airpocalypse in December, a few months after the government grandly established a Shanghai Free Trade Zone to woo the foreign financial sector.

The good news is that over the last several years China has acknowledged the severity of the problem (something its badly polluted rival India still needs to do). Chinese Premier Li Keqiang famously declared a "war on pollution" in March. Facing up is the first step toward making improvements, though if history is any guide, it's going to be a long and depressing slog -- made harder by the fact that fighting pollution means shutting down factories and limiting vehicular traffic, which dents the economy. But it's hard to put a price tag on resurrecting the "Made in China" label, and on keeping Fido healthy.